The Worst Day In Stocks Since Early October; And A Burger To Go With It

Ulli Market Commentary Contact

Wed pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

Stocks took a beating today. The S&P 500, Dow and Nasdaq all dropped more than 1.5%, and marked the third straight day of losses on Wall Street.

The dominant financial story remains oil, as the price of crude plunged again after the Organization of Petroleum Exporting Countries (OPEC) slashed its estimate of how much crude oil it will need to produce in 2015. Crude oil prices hit five-year lows today thanks to burgeoning supply from North American producers. The OPEC projection for 2015 production is 28.9 million barrels a day, which is 300,000 barrels more than previously forecast.

In addition to the dropping price of oil, the market has taken a hit on concerns over sluggish global economies, particularly in Asia and Europe. A sell-off of stocks in China continued today as well, despite a rebound today in Chinese equities that lifted the Shanghai composite index nearly 3%. While individual stocks may look good, the country is still experiencing slowing growth.

In positive glutinous news, Carl’s Jr., will become the first major fast-food chain to sell a “natural” burger when it rolls out the “All-Natural Burger” Dec. 17. The strategic move by the regional chain comes at a time when fast-food chains are fighting to improve the perceived quality of their food. But what exactly is “natural” about the burger? I guess we shall soon see.

All of our 10 ETFs in the Spotlight joined the trend reversal and headed south today as yesterday’s rebound from an early morning drop know looks like a dead cat bounce.

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Dow And S&P Close In The Red For Second Straight Day

Ulli Market Commentary Contact

Tue pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

It was a bit of a quiet day in regards to market moving news. Stocks were steady early in the day, but fizzled later and, despite a tremendous rebound, the S&P 500 and Dow both closed in the red. The Nasdaq was the only major index that inched up, driven higher by strong tech stocks.

It was not a good day for Chinese equities. Hong Kong’s Hang Seng index tumbled 2.3% to 23,485.83 and mainland China’s Shanghai composite index plunged 5.4%. Also, half of the 15 stocks on the NYSE Arca China index, which trades on a major U.S. exchange, were down today. One of the big drivers impacting the Chinese markets negatively has been continued decline in energy stocks, as well as the fact that China tightened lending rules for short term loans.

Looking forward to the rest of December and onwards to 2015, it is fair to stay optimistic. An improving job market coupled with low oil prices means the outlook for 2015 is still looking good. But slower economic growth in the rest of the world and the uncertainty about interest rates could increase market volatility. As always, market pullbacks can occur at any time and for any reason, which means you better be prepared via my recommended exit strategy.

Again, 3 of our 10 ETFs in the Spotlight managed to climb higher today; however, none of them made new highs as the YTD table below shows.

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A Sluggish Start To The Second Week Of December

Ulli Market Commentary Contact

Mon pic

[Chart courtesy of MarketWatch.com]

1. Moving the Markets

U.S. stocks dropped on Monday with the Dow stumbling more than 100 points. The S&P 500 retreated more than 0.8% and the Nasdaq gave back more than 0.7%. Falling oil prices were the culprit that dragged down the energy sector. U.S. crude fell more than 4% to close the day at $63.05 a barrel. Chevron (CVX) and ExxonMobil (XOM) were two of the biggest decliners in the Dow. Chevron dropped 3.8% to $106.70 and ExxonMobil fell 2.3% to $91.69.

More evidence of slowing growth in East Asia also raised concerns for investors today, mostly about global demand for manufactured goods, shown by weak trade data from China and news that Japan’s recession may be more serious than initially presumed. Chinese stocks surged on the news though because holders of mainland China stocks are betting on increased government stimulus.

On the upside, shares of Cubist Pharmaceuticals (CBST) blasted up 35% today today and passed the $100/share mark after Merck (MRK) announced that it will be acquiring Cubist for $102/share.

With little exciting economic news ahead this week, I can only hope that the markets will shrug off this slow start to the week and get back on their bulls to charge ahead.

3 of our 10 ETFs in the Spotlight bucked the trend and inched higher today; all 3 of them made new highs as the YTD table below shows.

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ETFs/Mutual Funds On The Cutline – Updated Through 12/05/2014

Ulli ETFs on the Cutline Contact

Below are the latest ETF Cutline reports, which show how far above or below their respective long-term trend lines (39 week SMA) my currently tracked ETFs/MFs are positioned.

The first report covers the ETF Master List from Thursday’s StatSheet and includes 410 ETFs, of which currently 264 (last week 278) are hovering in bullish territory.

The second report includes only High Volume ETFs. To clarify, High Volume (HV) ETFs are defined as those with an average daily volume of $10 million or higher.

These ETFs are generated from my selected list of some 97 that I use in my advisor practice. It cuts out the “noise,” which simply means it eliminates those ETFs that I would never buy because of their volume limitations. 41 ETFs (last week 44) have managed to remain in bullish territory after the recent market volatility.

The third report covers Mutual Funds on the Cutline. There are currently 659 (last week 710) above the line and 187 below it out of the 846 that I follow.

Take a look:

1. ETF Master Cutline Report

2. ETF High Volume Cutline Report

3. MF Cutline Report

In case you are not familiar with some of the terminology used in the reports, please read the Glossary of Terms.

If you missed the original post about the Cutline approach, you can read it here.

One Man’s Opinion: Are The Real Job Gains For November Higher Than Reported?

Ulli Market Review Contact

92835431Despite the solid November nonfarm payroll report, the “doves” of the Federal Open Market Committee are likely to “shake it off” because policy makers tend to always remind investors one report doesn’t make a trend, said Carl Riccadona, an economist at Bloomberg.

However, it’s bit of a new norm in November for the labor market because if the economy is up-shifting, then it will be a very complicated first-half of next year for Janet Yellen and rest of the Federal Reserve “doves” to slowly tiptoe toward that first rate increase without riling the markets, he noted.

Asked if job gains in excess of 300,000 were sustainable, Carl said he was skeptical about sustainability. If investors looked at all the labor market indicators for November versus October, and if October’s report could be graded A, then November’s report really would have been an A-minus because there was actually some cooling.

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New ETFs On The Block: First Trust Eurozone Alphadex ETF (FEUZ)

Ulli Uncategorized Contact

104700912European equities have performed well this year despite stubbornly low inflation in the European Union with the pan-European STOXX Europe 600 Index jumping 3.1 percent in November alone.

Since all the major EU economies are net importers of crude oil, falling gas prices in pumps are expected to boost consumer spending across the region, thus creating sustainable demand in the real-economy and pushing up price levels going forward. The European Central Bank has already cut interest rates to record low level while introducing negative interest rates in order to boost growth.

First Trust, the Wheaton, Il-based sixth largest US issuer of exchange-traded funds, recently launched the First Trust Eurozone AlphaDEX ETF (FEUZ) to take advantage of eurozone’s twin economic stimulus; loose monetary policy and low energy prices. FEUZ is First Trust’s first dedicated euro-area ETF that focuses on eurozone-domiciled companies.

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